Estate Planning – Dwelling House Relief – What reliefs are available

Dwelling House Relief

Dwelling House Relief allows for a residential property to be passed to an individual free of Capital Acquisitions Tax (CAT), once certain conditions have been met.

Due to this relief being “used in a manner that was outside the original intention”, The Minister for Finance proposed a number of changes in the last budget, which were signed into law on the 25^th December 2016.

In order to avail of this relief the following conditions must be met:

On Inheritance

• Dwelling must have been occupied by the disponer as his/her only main residence at date of death. An exception is made if the disponer does not occupy the dwelling for health reasons i.e., care in a nursing home.
• The beneficiary cannot have any interest in any other dwelling at the date of inheritance.
• The beneficiary must occupy the dwelling 3 years prior to inheritance. If the dwelling has been replaced during these 3 years, both properties must have been occupied for 3 out of the 4 years prior to inheritance.
• The beneficiary must continue to occupy the dwelling as their main residence for 6 years after the inheritance in order to avoid a clawback of relief. Any absence for employment reasons may be disregarded.

Gifts

• Relief applies where gifted to a dependant relative of the donor. A dependant relative is defined as:
  • Over 65 years of age, or
  • Incapacitated due to a physical or mental infirmity.
• Disponer is not required to occupy the dwelling in these circumstances